TRP Health Policy Report

The 114th Congress convenes tomorrow and GOP leaders are preparing their to-do list for 2015, when they will control both the House and Senate. Republicans will hold 247 of the 435 House seats, the biggest GOP bloc in 84 years. In the Senate, the party will have 54 of the chamber’s 100 seats. The new Republican majority is eager to dismantle key Obama Administration policies on immigration, environment, healthcare and elsewhere. First up will be a bill approving the Keystone XL pipeline, which President Obama has threatened to veto. Next, lawmakers will move to overturn the President November action easing immigration deportation policies. GOP lawmakers also plan to grill the President’s defense secretary and attorney general nominees and try to block the Administration’s new Cuba policy. Similarly, Republicans are expected to push for large changes to Medicare and a repeal of the Affordable Care Act, which the President has vowed to block. More likely to succeed are piecemeal attempts to change the health law. A prime candidate is repeal of the 2.3 percent medical device tax, which is expected to gain bipartisan support. The House passed a repeal measure last year, but the measure stalled in the Senate. Republicans are also expected to push narrower measures aimed at redefining the law’s definition of full-time work from 30 to 40 hours per week, repealing the Independent Payment Advisory Board (IPAB) (charged with recommending Medicare cuts), and possibly delaying the employer mandate.

Republicans point to some areas where they can work with the White House, notably on overhauling the tax code and trade agreements such as the Trans-Pacific partnership. Democrats and Republicans also both want to reform the business tax code, but efforts toward bipartisan deals could be overwhelmed by other issues in 2015. Still, there are a number of deadlines that President Obama and Congress will have to face together. Government funding for the Department of Homeland Security expires in February – something only Congress can reauthorize. Funding for the highway trust fund, which pays for roads and other projects, expires in May. The Export-Import Bank’s authorization expires at the end of June, which means the agency would need new approval from Congress to finance more projects after that date. Congress will also need to act early this year to avoid a 21 percent cut in Medicare reimbursements to physicians scheduled to take effect April 1 under the sustainable growth rate (SGR) formula.

 Perhaps most importantly, Congress will have to decide sometime in the first half of the year whether to increase the debt ceiling, as the federal government could run out of the ability to borrow to pay all of its bills by the summer. Incoming House Budget Committee Chairman Tom Price (R-GA) has said the GOP should use the debt ceiling as an opportunity to push for significant changes in tax or spending rules. But the White House has said it wouldn’t negotiate budget changes in exchange for raising the debt limit. There could be other areas of joint focus, such as differing proposals from the White House and House Ways and Means Committee Chairman Paul Ryan (R-WI) to expand the Earned-Income Tax Credit, but both parties have said there is a relatively small window of time for any negotiating, given the fast-approaching 2016 Presidential campaign.

Several Health Law Provisions Set to Take Effect in 2015

Several provisions of the Affordable Care Act are expiring or taking effect for the first time in 2015. For instance, the ACA's employer mandate, after being delayed twice, goes into effect for large companies (over 100 employees) this year. Although the mandate requires all employers with more than 50 full-time employees working 30 hours or more per week to provide affordable health insurance coverage to workers or face fines, according to a timeline released by the Department of Treasury and IRS last February, businesses that employ 50 to 99 full-time workers will have another year to provide health insurance coverage to employees. These employers will not face fines for failing to provide coverage to workers until 2016, according to the final rule. Meanwhile, businesses that employ 100 or more full-time workers will be subject to the mandate starting this year. However, the final rule gives these employers more time to provide coverage. To avoid fines, large employers only need to offer coverage to 70% of workers in 2015, rather than 95%. They will need to start offering coverage to 95% of workers in 2016.

On the individual mandate, most Americans have been required to have health insurance since January 2014, but the financial penalties for those who ignored it will only go into effect during tax season this spring. Each person without insurance will pay $95 or 1 percent of their income, whichever is higher. Implementing the new fines next year will be a major challenge for the IRS – an agency that is dealing with sharp budget cuts and a bevy of new responsibilities. House lawmakers have voted several times to either delay or repeal the mandate, and the incoming Senate GOP leadership has raised the possibility of holding similar votes this year. In addition, some business groups and GOP lawmakers are expected to continue their push to raise the mandate's threshold for full-time workers from 30 hours a week to 40 hours a week. The House approved a bill (H.R. 2575) in April 2014 that would have raised the threshold, but it did not advance in the Democratic-led Senate. According to senior Capitol Hill aides, House GOP lawmakers will reintroduce the measure as soon as this week.

Other potential challenges to the ACA and other health programs this year include:

• Addressing the scheduled expiration of funding for the Children's Health Insurance Program (CHIP), which was reauthorized under the ACA, in September 2015; 
• Cuts in Medicare funding faced by providers for failing to demonstrate meaningful use of electronic health records;
• The end of a temporary increase in Medicaid reimbursements for primary care physicians, which could affect access to care; and
• King v. Burwell, a Supreme Court case challenging federal subsidies given to U.S. residents to purchase coverage through the federal exchange.

 HHS: Most ACA Customers Qualify for Subsidies

Last Tuesday, HHS announced that nearly 90 percent of people who bought health insurance in the second year of the Affordable Care Act qualify for government help to pay their premiums. Federal officials said the new figure signals success for the government’s extensive push to promote financial assistance for millions who remained uninsured after the health law’s first year. HHS also announced that at least 4 million people signed up for healthcare for the first time since open enrollment began Nov. 15. That includes more than 3.4 million people who selected a plan in the 37 states using the federal healthcare.gov exchange, and more than 600,000 consumers who selected plans in the states that are operating their own exchanges. The HHS report is the first detailed look at state-by-state enrollment so far in the exchange for 2015. HHS compared this year’s figure to the same period last year, when 80 percent of people were deemed eligible for subsidies. But many health policy analysts said the figures are difficult to equate because HealthCare.gov’s technical flaws prevented so many customers from buying coverage last fall. Separately, HHS announced that 6.5 million people have bought coverage through the marketplace and 8.1 million people have submitted applications. About 60 percent of customers using the federal exchange were auto-enrolled. This year’s open enrollment period runs through Feb. 15.

‘Doc Fix’ Looms as Early Healthcare Priority

Before adjourning the lame-duck session in December, Congress passed a $1.01 trillion spending bill that will keep most of the federal government funded through next September. But lawmakers failed to pass a fix for the Medicare sustainable growth rate (SGR), leaving only 37 legislative days before the 21 percent SGR cut takes effect on April 1, 2015. Congress will begin anew with many new members who have not been a part of the bipartisan, bicameral SGR Repeal and Medicare Provider Payment Modernization Act of 2014 (H.R. 4015/S. 2000). Three committees came to an agreement on reform in 2014, but the New Year brings not only new members, but new committee chairs. However, most of the new committee leadership on both sides of the aisle have said they will likely continue to support the SGR bill. While both parties agree that the SGR is flawed and needs to be repealed, they remain sharply divided on how to pay for the cost of doing so. Most analysts say it is doubtful that lawmakers will resolve their differences before the spring deadline, and predict that Congress will pass another short-term fix before the April deadline.

Rep. Dent Puts Device Tax Repeal at Top of GOP’s Agenda

Last week, Rep. Charlie Dent (R-PA), who will serve as chairman of the House Ethics Committee in the next Congress, said repeal of the ACA’s 2.3% medical device excise tax should be the GOP's top priorities after it assumes control of both houses of Congress. In a media appearance, Dent said that repealing the medical device tax along with building the Keystone Pipeline and restoring a 40-hour work week were all major priorities for the GOP-led legislature. Last January, Dent included a repeal measure in a jobs bill he introduced alongside measures to restore emergency unemployment benefits. In 2013, he led a coalition of 20 moderate House members with Rep. Ron Kind (D-WI) on a compromise bill end a government shutdown that would have included repealing the tax and paying for it by making changes to pension fund rules. The device tax fight is expected to heat-up quickly in the upcoming legislative session. Incoming Senate majority leader Mitch McConnell (R-KY) said a vote to repeal the Affordable Care Act and its 2.3% medical device tax could come as soon as next month, and on Sunday’s edition of Meet the Press, Senators Amy Klobuchar (D-MN), a leading Democratic proponent of repeal, suggested that bipartisan talks in the Senate were making real progress on finding an agreeable offset for its projected cost to the Treasury. Senior Capitol Hill aides further say the device tax could become a bargaining chip in bigger talks, perhaps over the debt limit.